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UK: Higher gas and electricity bills linked to higher oil prices

Millions more households are facing higher fuel bills this winter after Powergen, the UK's second biggest energy supplier, said it was raising gas and electricity prices.

The increases follow big rises from the retail sector leader British Gas and third-ranked Npower, sparking warnings that hundreds of thousands of consumers face fuel poverty.

Consumers were also cautioned that they could face further sharp increases next year if oil prices stay high.

Powergen, which has 6 million customers, said gas bills would go up by 9.6% and electricity by 8.9%, increasing average bills for dual-fuel customers by around £55 a year.

"This price rise is not a step we've taken lightly. All suppli ers are currently affected by rising wholesale costs and we have delayed the increase longer than most of our competitors," said Nick Horler, managing director of Powergen Retail.

Powergen said wholesale electricity prices rose by 39% in the last six months while wholesale gas prices went up by 49%. Consumer group Energywatch warned that the increases were forcing thousands more people into fuel poverty.

"Consumers deserve a decent explanation of why they will have less to spend on food, clothes and other essentials because of their growing energy bills," Energywatch chief executive Allan Asher said.

Help the Aged added that every 10% rise in fuel bills pushed another 500,000 people into fuel poverty.

The Treasury said it was not reviewing the overall level of the winter fuel allowance but was looking at what could be done in crisis situations; for example a very hard winter, a very early winter, or in cases where there had been very sharp increases in bills.

The latest round of fuel price rises began in the late summer. British Gas said in August that it was raising gas and electricity prices by 12.4% and 9.4%. Its move was followed by an 11.8% increase in gas bills and a 7.6% rise in electricity prices at Npower. Powergen has already raised gas prices twice this year: by 4.9% early in the year - when electricity prices increased by 6.9% - and by 3.1% in September.

Business and industry is also having to pay sharply higher energy prices. The CBI estimates higher fuel bills could threaten the recovery in manufacturing with power costs climbing by £5bn in 2005.

Guardian Unlimited © Guardian Newspapers Limited 2004

Editorial Notes: Original headline 'Bigger bills for millions as Powergen joins rivals in raising prices' -AF

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